Systems for closed-loop learning

Technologies and consumer preferences change. Rivals attack successful businesses. That's why even companies with Great Repeatable Models℠ must continually adapt to new competitive environments. Otherwise they run the risk of winding up like Kodak or Kmart, also-rans in a race that suddenly sped up.

The key to adaptability is continual learning. Companies have three main sources of input:

Learning from the core customer. This is the most common feedback loop in Great Repeatable Models—direct, immediate customer feedback, often through the use of Net Promoter® systems. Even companies that have traditionally marketed through third parties have found ways to communicate directly with customers. The Swedish truck manufacturer Scania, for example, has decided that feedback from truck drivers through dealers is slow and inadequate, and has now established methods to talk directly and continually to truck drivers. Scania pledges to address easy-to-fix problems in ten days, and it captures a wide range of feedback for longer-term product modification. (Learn more about closed-loop systems at www.netpromotersystem.com)

Learning from key operations. A second important set of feedback loops are systems that monitor and highlight key operating parameters, enabling managers both to react to problems and to share learning across the system. The idea of the experience curve, defining the relatively predictable relationship between repeated experiences and unit cost, shows the power of this learning. As the figure shows, IKEA has reduced the cost of its famous Billy bookcase an astonishing 76 percent (corrected for inflation) through innovations in materials, fasteners and construction details.

Learning from frontline employees. This is the one case where we offer an example of practices from our own firm, Bain & Company. For the past nine years in a row, Bain has been voted the best consulting firm to work for, thanks partly to its systems for internal feedback and response. For example, after every project or phase of a major project the firm conducts a case team survey, which is shared with the project team and is a critical factor in a manager's performance appraisal. The survey asks questions such as whether there was yield loss in the project, whether respondents felt that the project added enough value to the client and why. This is valuable data for the firm as it tries to understand and replicate its success.